The public sector should be downsized and its workers upskilled, the new president of the Malta Chamber of Commerce, William Spiteri Bailey, said.

The chamber has for long been saying that the public sector is bloated beyond what is required and that this is depriving private industry of manpower, a criticism that is not accepted by the government whose principal permanent secretary Tony Sultana in December told this newspaper that it is an "incorrect sweeping statement".

But the newly-elected president of the chamber has continued on what his predecessors have been lamenting about for years. In an interview with The Malta Independent on Sunday, days after taking over the chamber presidency, Spiteri Bailey was referred to the government's labour migration policy, which he described as a "significant step forward" to address workforce challenges.

But the policy needs to be supported by reduced public sector employment, he said. The public sector, both directly and indirectly, "is enormous" and has taken away many workers from industry, "creating problems".

"I think the public sector can and should decrease its workforce, but at the same time create ways of upskilling - of helping these personnel who are usually low earners to upskill, to be able to earn more and to adjust in their take home pay as well."

Spiteri Bailey said that there's also the issue of lacking certain skill sets due to the size of the country, and so foreign personnel are needed in certain areas. He added that it also needs to be understood that Maltese nationals are no longer interested in taking up certain jobs, in part due to the standard of living having gone up. "Certain jobs and roles like waste collection, bus driving, cashiers, in part due to the standard of living having gone up.

The chamber president was asked what course of action he would suggest be taken in order to address Malta's infrastructural challenges. He was also asked if Malta can continue coping with an increasing population.

In response, he reiterated the need for foreign workers in areas such as health and tourism, along with areas where Maltese people do not seem to want to work in general. "In those areas, whether we like it or not, we need to continue seeing foreign workers unless we want to reduce the service, and I believe nobody wants the healthcare service to be reduced, but we want to increase it."

The more the Maltese population ages due to the low birth rate and a longer life expectancy, the more healthcare assistance will become necessary.

Having said that, he spoke of certain measures such as the labour migration policy as a means of addressing areas where such workers are not required or can be reduced. He continued that an aim of his presidency is to move towards assisting enterprise to look into automation and digitalisation in order to transform businesses and make them more efficient.

Speaking more on the labour migration policy in the context of the recently published Vision 2050 document, which explains the government's plans for the next 25 years, Spiteri Bailey said that the chamber held a number of meetings with Identita and the Ministry for Home Affairs, and he remarked that the chamber is pleased to note that most of its recommendations have been taken up.

Spiteri Bailey added that the chamber has requested clarifications on a number of items with regard to the labour migration policy, such as the termination rates per firm, "especially if the companies are in group structures, probationary periods, etc". He continued that clarifications have also been requested regarding quotas and subcontracted workers, as well as on how rules will be enforced across stamping and outsourcing agencies. He added that the chamber also supports the idea of transparent studies in order to determine fair market wages, remarking that it believes that it is important for all employees to have a fair market wage.

Vision 2050

The Malta Independent on Sunday asked Spiteri Bailey for his thoughts about the economic plan detailed as part of Vision 2050, as well as whether the chamber was actively consulted in the lead up to the government publishing the document.

Spiteri Bailey stated that the chamber feels that Vision 2050 is an encouraging step towards a holistic long-term strategy and clear direction for the country. He again noted that a lot of the chamber's recommendations were taken up, and added that a number of meetings were held with Economy Minister Silvio Schembri, saying that the chamber was "very much involved", also through the MCESD.

The chamber feels Vision 2050 is good because it consolidates multiple visions into one, and that it is something which goes beyond the five-year electoral cycle. He added that it is good that there are sets of measurable targets, but that the important question now is how the initiatives of the government's plan will be implemented, defined, and monitored. He remarked that the chamber feels it is important that the MCESD remains involved and is consulted.

He stated that it is important that the government as a whole works together on Vision 2050, and he added that it should be one with collective resolutions from the government, the Opposition, and all stakeholders working together. "Consensus is not a sign of weakness, but political maturity, which we need to see more of in other aspects as well, especially in relation to long-term decision-making."

As part of Vision 2050, the government stated that it is going to move away from measuring national progress by GDP, to instead looking at life satisfaction, median disposable income, and education, among other indicators, as a means of measuring progress.

Asked about this, Spiteri Bailey replied that at the end of the day, GDP is important, but GDP even in the way it is measured could be coming from increased GDP per capita, or it could be coming from the increase in the labour force, "so the GDP automatically grows because there is a larger labour force". He continued that at the same time, people are not satisfied with problems related to traffic, overpopulation, overloaded hospitals, etc, and so balance is needed. "Looking at how people are living, looking at the quality of life, is ultimately the ultimate."

Country's debt 'very high'

According to the National Statistics Office, Malta's debt as of January 2025 reached a record high of €10.5 billion. The chamber president was asked how serious this national debt is from the chamber's perspective, as well as how the debt can be addressed.

Spiteri Bailey remarked that the national debt is "very high", and that it has "obviously increased because of government borrowing to support economic programmes and public services". However, he said, despite the increase of Malta's debt, the debt to GDP ratio "remains relatively moderate" when compared to other European Union nations. "So that, strictly speaking, is still manageable at the moment."

He continued that the government is aiming to balance necessary public spending with sustainable debt levels and ensure long-term financial stability. He said that the Maltese economy performed quite strongly the last years, reaching a growth rate, "which is significantly higher than the EU average". He also spoke of Vision 2050's target of increasing the GDP by about 5% each year.

"The impressive growth," he commented, "has been driven by key sectors like tourism, financial services, and information technology." He added that as part of Vision 2050, there is an aim to continue increasing those areas.

The chamber president stated that rising debt and rapid growth present a challenge in the fiscal landscape. "While economic growth enhances government revenues and helps debt financing, the increase in debt underlines the need for prudent fiscal measures. I believe that going forward the government must pursue some economic policies that sustain growth, but at the same time keep in mind the debt, and keep the debt within sustainable limits in order to ensure Malta's economic future." He added that he thinks Vision 2050 may be addressing this as well in the future.

Trump's tariffs

At the time of the interview was taking place, the United States of America had imposed 20% tariffs on the EU, and in that context, The Malta Independent on Sunday asked Spiteri Bailey how Trump's tariffs would impact Malta specifically, both in the short and long term. On Wednesday, the Trump administration paused the tariffs for 90 days, but still kept a 10% duty in place on all countries excluding China, which had its import tariffs to the US raised to 125%.

The chamber president commented that the situation is "very volatile", as he said that there is retaliation from every part of the world, and that the situation is "very fluid".

With that said, he remarked that Malta's trade with the US came out to around 5% of Malta's total goods exported in 2024, and that imports directly from the US accounted to approximately 3.5%.

Acknowledging this, he said that the indication is that the direct impact of the US tariffs is expected to be "relatively limited", but that the concern lies more in the indirect impact. The reason for this, he said, is because Malta had exported approximately €22.8 billion in services in 2024, with €14.5 billion directed to EU countries.

The problem, Spiteri Bailey said, is that when Malta exports to the EU, if those countries then export to the US, Malta may be indirectly affected, though the extent of which is difficult to ascertain at the moment.

"If these EU economies face a slowdown due to these tariffs, it would negatively affect Malta, and obviously Maltese exports would drop. But we need to see how this will pan out."

Rule of law

The government's bill to make amendments to the way magisterial inquiries are initiated was recently approved in parliament. The bill has received much criticism for removing the right of citizens to directly petition a magistrate to open an inquiry. With the bill coming into law, individuals will need to file a police report first, and will only have the option to go to the Courts to decide if a magisterial inquiry should be held after six months have lapsed since filing their report. Many have raised concerns about the impact this may have on the rule of law in Malta.

Asked about this, Spiteri Bailey stated that the chamber does not agree with the bill in its totality, but that there are areas where the chamber does agree. An example of an aspect which the chamber agrees with, he said, is for the dedicated pool of magistrates, and for the rights of victims. However, he said that the chamber expresses concerns on the restrictions regarding the ability of private citizens to request inquiries, as well as the increased burden of proof. "We feel that this hinders and could obstruct justice, and limit the effect of investigation. "

The chamber president added that the issue of local expertise is also something to question, as he reiterated that certain skills may not be found in Malta due to the size of the country. He added that the potential retroactivity is also something the chamber feels is questionable.

"I think the bill, while probably well-intended, needs substantial revision," Spiteri Bailey commented.

Spiteri Bailey spoke of the importance the chamber places on good governance and ethical behaviour as guiding principles.

"We feel that good governance and ethical behaviour are fundamental to achieve sustainable and continued business growth... They build trust with stakeholders like employers, customers, investors, regulators, and ensures transparency, accountability, and fairness in decision-making. We feel that this is very important. Ethical practice actually reduces certain risks like legal issues and reputational damage."

He continued that strong governance structures and creates a stable environment as well as long-term investment possibility. He added that good governance in today's world is not just a best practice, but a critical driver of resilience innovation, and enduring success.

The chamber president concluded that above all, stability anchored by a clear vision allows businesses to work forward strategically, and it needs to be ensured that such principles are kept in mind when going about business as it will ensure long-term sustainability.

Second part of the interview will be carried in The Malta Business Weekly on Thursday